Thursday, February 24, 2011, (DAY 6):

I’m excited about today. Our first visit will be to one of the locations I arranged. I’m feeling a bit under the weather. I had begun to feel a head cold coming on last evening while at the buffet. Symptoms are mostly alternating between a runny nose and congestion. My first instinct is to blame my new Norwegian friend, Alex. He arrived here sick, and I sat next to him at dinner Monday. But the truth is, his symptoms had been more flu-like, and this is a simple cold. Ugh. I find out that Katie Issaians, Medech and Vivian are all sick with similar symptoms.

I put on one of my new custom made shirts and my custom made suit. I may feel yucky, but I intend to look fabulous! At breakfast I skip the usual and return to the noodle station for the hot broth and noodles. I add extra peppers and chili sauce to clear my sinuses.

In the lobby I’m greeted with compliments from some of my peers
and the professor. I get a few other compliments throughout the day as people realize this is my new suit. Nice.

We board the bus and Dr. Basu lectures briefly on employment rates and concepts of social justice. Personally, I get a sense that he is overly admirable of the Chinese form of government and economy. I can tell that the majority of the students in our group have no knowledge of what happened in China following the expulsion of the nationalists. The re-education camps, effect of the Cultural Revolution and the excesses resulting in the deaths of millions of this countries own citizens in the establishment of the communist party.

I am closer to Dr. Basu in age than to many of my fellow students. His upbringing in India and times spent in other countries no doubt inform a perspective different from my own, yet much of his time has been spent in Western countries. His experiences in those are almost certainly different from my
own as well.

Even so, while I agree that China must be free to determine its own future, it is very clear to me that in a country that was supposedly built on the premise of a revolution by the “people”, there is still here every bit a class difference and an even more unequal distribution of wealth than in the US.

We arrive at Disney English. Full disclosure, in event my coverage here appears overly effusive: I work for Disney. So, this place TOTALLY ROCKS! The company is an interesting concept. It is a new start-up company (within a larger multinational) entering a new product in a new market. The firm operates English language centers seeking to teach English to children in three age groups. Very young preschool set (3 to 5 years), the kindergarteners (age 6 to 8) and the tweens (9 to 12).

nEducation is taken very seriously in China, and due to China’s one-child policy, there are 6 adults (the parents and both sets of grandparents) who are able to focus all of their resources to insure the child has every opportunity to compete. It is recognized that English is going to be an increasingly important component of a child’s skills in order to compete for better schools and jobs. There is an estimated market of $3.5 billion for private lessons teaching English to children in China today, with a projected 29%   growth rate, compounded annually. Disney sees opportunities there now in Tier 1 cities (Shanghai and Beijing) now and in Tier 2 and 3 cities later. By Tier 2, that means cities with average populations of 6.5 million.

Our host is Andrew Sugarman, Senior Vice President and General Manager. He gives us a great overview of his professional history and an overview of Disney English. The interactive technology used in the
program is quite impressive. One of the instructors, Caroline, demonstrates the technology and explains how the program using a mixture of Disney story content, participation by students, rhythm and touch, This approach  differs from the “drill and kill” approach typical of China’s secondary education.

Andrew speaks again for some time, answering student’s questions about the company’s reporting structure, short and long-term objectives and biggest challenges. Of challenges, Andrew cites interacting with the government as the greatest challenge. That includes licensing, city requirements and provincial governments. The second challenge is talent acquisition and development, to position the staff to support projected growth. Real estate is a challenge, with significant competition for physical building s that meets the requirements of the business. And, finally, content and programming to address parental demands and shifting tastes and needs.

Asked what students might do if they want to work
in China, the first suggestion Andrew provides is to learn conversational Chinese. Don’t worry about learning to read or write, since that is not as necessary (and difficult for Chinese, as well).  If planning to do a start-up business, come live in China first for 6 to 12 months and develop contacts, to start a business, you MUST have a local partner to be successful. If you want to work for a company, consider consulting or banking. Pay will be lower and the position should be viewed more as an investment than necessarily identifying a specific job you are interested in doing.

As we prepare to exit, a class has ended and a string of adorable children make their way out of the facility. Several freely call bye-bye, and one young boy, probably 3 year old, blows kisses to us on his way out.

From Disney English we head out for our next visit, which will be the Coca-Cola bottler in Shanghai. First, however, we stop for lunch. We stop at
a mall along the way that offers a variety of food companies. Some of us head into the local Pizza Hut, while others pursue other options.

We arrive at Coca Cola and are escorted into a theater where we are offered a bottle of Coke, Sprite or Fanta from the refrigerator. We view a brief video presentation on the history of the Coca Cola company and then invited to tour a museum where we see a wall showing the various products produced and distributed in China. Many of the items are familiar, even though the logos are in Chinese. Others still are produced specifically for the Chinese market. An example includes a form of Sprite which includes green tea. Another is a Minute Maid product that includes milk.

We tour the facility, which, in
contrast to both VW and China Precision Technology, is almost completely automated. The factory has multiple lines. The fastest is able to process 1500 cans per minute. We view the can process, bottle washing process and packaging. Our guide confirms that the facility runs two shifts per day, almost throughout the entire year. There is one day in October during which the facility is closed down. Aside from that, lines may be taken down for maintenance and servicing to comply with inspection and audit requirements.

Our tour concludes and we are sent on our way with gift bags that include a note pad and a can of Coke.

The class is scheduled to attend a taping of a television show as audience members. Katie and I are feeling sicker, however, so we take a cab back to the hotel.

In the hotel, I watch TV and get caught up on the latest news regarding the earthquake in New Zealand and the event s in Libya. We have been following these
stories on CNN, BBC or Bloomberg news. As I watch the news, I get my first taste of Chinese censorship! Bloomberg begins to report on a recent protest in China, and tied it to a series of unauthorized protests recently in China when the screen goes blank. At first I think the TV has gone dead, but I see the power light is on. I turn the station and every other station is up and functioning, but Bloomberg News remains blacked out for 15 minutes.

I head to dinner downstairs in the hotel briefly, then return and work on my blog some more before pressing my shirt and getting ready for bed. I drink tea and water throughout. Yifan returns to the room around 1030 PM and spends a half-hour with me giving me pointers on where to go when I travel to Beijing next week. I’m getting very excited again!

Wednesday, February 23, 2011 (DAY 6 of Course)

We start on the road early today, at 7:15 AM because our first visit is to a manufacturing firm China Precision Technology, in Cixi, Zhejiang Province, about one and one-half hour from Shanghai. The company’s primary product is content for consumer electronics, such as tuners for TVs and connections for cable modems and DVD players. The company also produces materials for mobile phones and logos for car companies. 80 % of the firm’s revenues come from Fortune 500 companies.

As we travel, Dr. Basu lectures on economic issues, including currency, consumption, trade imbalances and inflation. He talks about the differences in savings rates between China and the west and what might be done differently by each as we look toward the next 20, 30 or 50
years.

En route we pass over the world’s longest sea bridge, the Hangzhou Bridge, which spans 36 km (21.6 miles) across the Hangzhou Bay north of Shanghai.

This firm is a true manufacturing firm. As we enter the property, our bus is saluted by uniformed security guards at the main gate. We disembark at the main entry and are escorted into a conference room for an overview of the company, its history, locations and revenue. The company, through entering into new products, and buying a company in Japan expects a 50% increase in revenue for 2011 over 2010, and foresees the same growth rate continuing for the next 3 years or so.

We are taken on a tour of the facility and see that this is essentially a traditional manufacturing
operation, with tool and die, press and fabrication. There is no special robotics or amazing automation. The primary advantage here is plentiful, low-cost labor. The shops employ nearly 2000 employees, average age 23 and 70% female.

Our host explains that average income if 2000 RMB (about $305) per month. According to China Daily, migrant, unskilled labor usually earns 1200 RMB per month (about $183) and recent college graduates earn 1500 RMB (about $227) month, so this statement may be an overstatement, or might reflect the higher wage level expected in Eastern China where living expenses are higher.

We are shown a dormitory that we are told the company spent 30 million RMB to construct (about $4.4 million). A dorm room on the second floor is shown to us that is decorated with posters, has three beds and has a cable internet modem. A quick survey of the building
arrangement shows 6 floors of living space in 3 buildings, each floor with 20 rooms per floor. That comes to 360 rooms. If even just three-fourths of the 2000 employees live in the dormitory, that means they would have to have at least 4 people per room.

Our group comment among ourselves on the way back from lunch in the dormitory area that the facility is in generally poor condition and has obviously been recently hosed down. Employees all are wearing blue uniform and many show recent makeovers (hair style, makeup, new jeans). We think we are being shown an atypical scenario.

The ride to our next company visit, back in Shanghai, takes nearly two hours. The day is much warmer today and we encounter severe traffic in Shanghai, making us very late to our appointment. This
is a terrible breach of protocol, where guests should expect to be from 5 to 15 minutes early to an appointment. Our hosts are kind and meet with us anyway.

The firm is Yuexing Group, Ltd., one of the top 500 enterprises in China. Begun in 1988 as a small shop manufacturing furniture, the firm has grown to a vertically integrated manufacturer and retail seller of high end furniture, which also supplies many five-star hotels. The company has diversified to other enterprises as well. 2010 revenue was 10 billion RMB (about $1.54 billion) and employs a staff of 7000.

The firm’s principal, Ding Zuohong, is very well connected to the Communist Party of China (CPC) and is shown with a number of key dignitaries. His many altruistic ventures are recounted in the firm’s presentation as well.

We tour
the facility and are suitable impressed by the many display rooms and rich dark woods and plush fabrics. This is clearly a company that has capitalized upon the opportunities presented by China being opened to trade with the rest of the world.

We depart this location for a special dinner as the guests of Dr. Wenyan Lee. Dr. Lee is an associate of Mr. Longping Sun, our host of Monday evening. Dr. Lee has made reservations for us at a special buffet restaurant.

En route I chat with my roommate, Yifan. He can tell many of our group is affected by this morning’s visit. I admit that some probably were, but I offer the opinion that this particular factory and dormitory are probably better than many, particularly those in other areas of China. I explain that we struggle with a desire to see people live in
better conditions than what we saw, but we also recognize the jobs these young people have now are probably better than what was available to them ten years ago and offer a path to a better life.

The conditions we see are not a reflection of an evil manufacturer exploiting young, uneducated workers but are a consequence of my country’s demand for increasingly cheap goods. The onus is on American consumers, American brands and the suppliers they engage to constantly seek to improve conditions for the producers of these goods.

To the company’s credit, they are seeking to develop an approach to social responsibility. Our host at the firm, Dr. Li, commented that he would be attending training in Sweden shortly on how to incorporate those values into the firm’s operations.

This is a not a neat and tidy conclusion to a troublesome issue, but an encounter with the reality of our world’s manufacturing environment today.

Continuing our time constraints, we take a wrong turn off the freeway and, by
the time we make a u-turn and head in the correct direction, are now stuck in evening rush hour traffic and are still 20 minutes from the restaurant. The venue is very restrictive, allowing guests to arrive only within 15 minutes of the scheduled reservation. We are close at 6:00 PM, so Dr. Lee and Yifan exit our shuttle bus to dash across traffic and make it prior to out reservation expiration.

This restaurant is like no buffet you have ever seen! The restaurant is 300,000 square feet and can accommodate 4000 diners. Our reservation has us seated in the center of the room, directly in front of the stage where a female vocalist performs with a 3-piece band.

The buffet extends on both sides of the stage and had every imaginable Chinese dish. Fresh fish, duck, goose, beef, fried food, baked food, raw
food. Vegetables, fruit, desserts. I’m frustrated to learn that smoking is allowed at the tables, but make the best of it…I won’t let it interfere with my appetite, that’s for sure.

The traditionally unfailingly polite Chinese appear to have stayed home this evening (our company and host excepted). Our group is bumped, ignored, cut in front of and in one case the object of cat calls. This didn’t disturb our time too much as we find our way to all of the various islands for food and beverage.

Part of our group returns to the hotel at about 8:15 PM while some remain behind to drink a bit more and burst into spontaneous Karaoke to John Denver’s “Take Me Home, Country Road”. The only problem: it’s not a Karaoke bar.